I just picked up on an apparently long-running academic feud between
Todd Zywicki (law professor at George Mason University) and Elizabeth
Warren (law professor at Harvard), mostly revolving around the
fascinating topic of bankruptcy. For example, here's
a Zywicki-coauthored op-ed where he deemed Congressional testimony
by Prof Warren and another colleague to be "junk". You'll also, in
the interest of equal time, want to check out Prof Warren's response,
where she states that Zywicki "offers no work of his own: no data, no
studies, no stories--nothing but the firm conclusion that he is right."
You can check out a 2005 Zywicki-Warren spat over the effect of
proposed bankruptcy legislation on child support payments here.
And this just seems to be the tip of the Google iceberg. Fun!
Back on August 14, Prof Zywicki fired another shot in
the ongoing skirmish in a WSJ op-ed. (It's behind the WSJ
subscription wall right now, but you can get to it by asking
the Google nicely and following the WSJ link.) It begins with
a description of
the impact of 2005's bankruptcy reform, but then goes on to discuss the
more general issue of the alleged growing financial woes of the
beleagured middle class. Which—surprise!—happens to
be the topic of a 2003 book, The Two Income Trap: Why Middle
Class Mothers and Fathers are Going Broke by
Prof Warren and her daughter Amelia Tyagi. But waitaminnit, Prof
Zywicki writes, there's a bit of a problem there:
In fact, using
their own numbers, it is evident that they have overlooked the most
important contributor to the purported household budget crunch -- taxes.
Could Warren and her daughter simply have spaced out when looking
at taxes? Well, first they look at a typical 1970s situation:
The typical 1970s family is headed by a working
father and a stay-at-home mother with two children. The father's income
is $38,700, out of which came $5,310 in mortgage payments, $5,140 a year
on car expenses, $1,030 on health insurance, and income taxes "which
claim 24% of [the father's] income," leaving $17,834, or about $1,500
per month in "discretionary income" for all other expenses, such as
food, clothing, utilities and savings.
Then they move to the 2000s:
The typical 2000s family has two working parents and a higher income of
$67,800, an increase of 75% over the 1970s family. But their expenses
have also risen: The mortgage payment increases to $9,000, the
additional car raises the family obligation to $8,000, and more
expensive health insurance premiums cost $1,650. A new expense of
full-time daycare so the mother can work is estimated at $9,670.
Mother's income bumps the family into a higher tax bracket, so that "the
government takes 33% of the family's money." In the end, despite the
dramatic increase in family income, the family is left with $17,045 in
"discretionary income," less than the earlier generation.
You'll note that most of those numbers are carefully expressed in
absolute dollar values (and
they're adjusted for inflation). The mysterious
exception is taxes, which is
expressed as a percentage. But it's not hard for even a law prof to do
the math and compare (as he puts it) "apples to apples":
In fact, for the typical 1970s family, paying 24% of its income in taxes
works out to be $9,288. And for the 2000s family, paying 33% of its
income is $22,374.
Although income only rose 75%, and expenditures for the mortgage, car
and health insurance rose by even less than that, the tax bill increased
by $13,086 -- a whopping 140% increase. The percentage of family income
dedicated to health insurance, mortgage and automobiles actually
declined between the two periods.
During this period, the figures used by Ms. Warren and Ms. Tyagi
indicate that annual mortgage obligations increased by $3,690,
automobile obligations by $2,860 and health insurance payments by $620
(a total increase of $7,170). Those increases are not trivial -- but
they are swamped by the increase in tax obligations. To put this in
perspective, the increase in tax obligations is over three times as
large as the increase in the mortgage payments and almost double the
increase in the mortgage and automobile payments combined. Even the new
expenditure on child care is about a quarter less than the increase in
taxes.
Overall, the typical family in the 2000s pays substantially more in
taxes than the combined expenses of their mortgage, automobile and
health insurance. And the change in the tax obligation between the two
periods is substantially greater than the change in mortgage, automobile
expenses and health-insurance costs combined.
Bottom line, which Prof Zywicki makes clear enough, but is too polite to
say outright: Prof Warren and daughter slant their presentation to
minimize any
impression that big government might actually be a huge contributor to
the typical family's financial problems.
You might want to keep this in mind for the campaign season, when
politicians of various stripes will want to at least pretend to care
about middle-class financial woes; ask them if they're supportive of
bringing back middle-class tax rates to where they were only a few short
decades ago.
[Equal time: You can read a longish article from Prof Warren and her daughter,
excerpted from their book, here, which
—surprise!—contains a small swipe at Prof Zywicki.]
Now if only this were a romantic comedy movie, Professors Zywicki and Warren
would find themselves forced into close proximity for an extended
period: cast away on a remote island, accidentally booked into the same
Tuscan villa, or in the back seat of a minivan trekking through
Kansas. After multiple amusing spats,
love would bloom! (Unfortunately, if it were a modern Hollywood
movie, the screenwriters would also probably have the Zywicki character
be politically converted by the Warren character. So never mind.)
I should point out that I'm far more sympathetic to Zywicki than Warren.
I looked at one of Prof Warren's Really Stupid Ideas here a
couple months back. And in one of those links above, you'll find her
advocating many others, most notably
a proposal to drastically expand "public education"
to cover—at taxpayer expense—two years of preschool and four
years of college. Moan.